50% of us hold only 1% of American wealth

California, 1936

Right-wingers cracked up on right-wing propaganda make much of the fact that almost half (around 46 percent) of Americans pay no federal income tax. It is true. The Wall Street Journal often calls these people the “lucky duckies,” and all right-wingers just know that the lucky duckies are getting a free ride off the rest of us and that it’s the lucky duckies who are eating the lunch of the middle class. What right-wingers don’t know, though, because their propaganda machine doesn’t tell them the rest of the story, is that almost all of those lucky duckies are living at or below the poverty line (defined as an income of $23,350 or less for a family of four including two children). They pay a high proportion of their income in other taxes, but they don’t pay any federal income tax because their income is so low and they have dependents. The highest income for qualifying as one of these lucky duckies is $26,400 for a couple with two children. But many of these people make less than $15,000 a year. The reason that so many Americans pay no federal income tax is that poverty is so widespread — measured as either income or assets.

(By the way, in 2011, 78,000 taxpayers with incomes between $211,000 and $533,000 paid no federal income tax. Worse, 24,000 filers with incomes between $533,000 and $2.2 million paid no federal income tax. And not only that, but 3,000 filers with incomes above $2.2 million paid no federal income tax. What were we saying about lucky duckies? You can be sure that the Wall Street Journal hasn’t reported on these lucky duckies. And it is generally assumed by those who bother to think about it for a second that the reason Mitt Romney won’t release his tax returns is that he paid no federal income tax for one or more years.)

Americans, in their bottomless ignorance and eagerness to be deceived, hold extremely warped notions of just how poor the poor are and how rich the rich are. Middle-class Americans also have a been fooled into believing that they get a much larger piece of the pie than they actually get.

My old colleague Dan Froomkin, in the Huffington Post, reports today on a study by the Congressional Research Service that shows that half of Americans hold 1 percent of the nation’s wealth. The top 1 percent hold 34.5 percent, and the top 10 percent hold 74.5 percent.

A study in 2010 by academics from Harvard University and Duke University surveyed Americans on how Americans think wealth is distributed. On average, Americans thought that the richest 20 percent hold 59 percent of the wealth. The real number is closer to 84 percent. Americans were shown pie charts showing the distribution of wealth in different countries and were asked which country they would prefer to live in. They chose Sweden, where the top 20 percent control only 36 percent of the wealth. Distribution of wealth in the United States actually is similar to Latin American countries such as Nicaragua, Venezuela, and Guyana.

Each year since the late 1970s, the rich have been eating more and more of our lunch. There are two main ways they have done this. First, they have drastically changed taxation, so that the rich pay are now paying taxes at the lowest rate in 80 years, while increasing the tax burden on the middle class. Part of the reason the right-wing propaganda machine goes on and on so loudly about taxes is to obscure those facts. Second, they have been scooping up almost all the gains from increased productivity, as this chart shows:

The most important task of Fox News and the right-wing propaganda machine is to keep Americans ignorant of these basic facts. If you keep ’em angry at the lucky duckies, they won’t notice who actually is eating their lunch.

Another peculiarity of Americans is that they have the oddest tendency to identify with the rich, even when they’re barely getting by, falling farther behind each year, and are utterly dependent on the safety net — such things as Social Security and Medicare. It’s an excellent exercise in propaganda analysis, actually, to try to figure out how this is accomplished. I believe that the two biggest factors are television (including not only the propaganda channels but entertainment channels as well) and the “prosperity gospel” prevalent among evangelicals. This “gospel” teaches people that the poor are to be blamed for their situation, that god wants them to be rich, and that giving money to the church is the first step to prosperity. It also teaches them to love war and to hate anyone who isn’t just like them, but that’s a different rant. My point is that it’s as sorry a theology as has ever been devised, which is saying something, since there are so many sorry theologies out there. But it does pack ’em in on Sundays, because they love to hear that god wants them to be rich and to consume voraciously.

But this is nothing new. John Steinbeck was aware of it:

Note: I am aware (because I always try to diligently check my facts to avoid being corrected in a comment) that some have disputed this Steinbeck quote, but whether Steinbeck said those exact words or not, the observation is a true one.

3 Comments

DanCDaves wrote:

I think there’s more to it than you’ve considered here, especially regarding the entitlement programs, wages, and the right-wing propaganda machine. I’ll start with the entitlements. I know from my current situation, which is rather bleak, obviously you’ll find out, compared to millionaires, etc., that the Affordable Care Act will not help my wife and I out. Argue what you will about European nations providing universal healthcare, how the US is way behind, how some have to be sacrificed to save the masses – all of those reasons are there just to reinforce an ideology. The story I’m about to tell you I’ve told to two different progressives (my term for them), both of whom showed no interest in our plight but nonetheless profess to, an abhorrent and pervasive quality I find in many so-called progressives.

My wife doesn’t have insurance. Her old employer cut it last November, having waited to the last week before the allotted time to find new insurance ran out before telling them, then forcing them to sign paperwork saying they wouldn’t sue or else lose their jobs. The employer is a Health Services funded rehab facility that runs on little or no oversight but gets public money and uses it poorly per my wife. I tried to have the place investigated by the state, but not being an employee or having proof, I couldn’t do it nor could I convince my wife to step up. In the end, she was fired mid-way through a four-week notice she offered to provide new employee training by people with felony convictions who were hired off the street because they had “hands-on” experience in drug rehab. She has a BS in Addiction Studies. Luckily, she has a new semi-privately funded employer in the same field, but they don’t provide insurance. As of now, we are on a shoestring budget, but we’re well over the poverty line, and based on our assets alone, we’d be well above any actual economic poverty line. My savings account interest rate is at rock-bottom, and unless the housing market turns up in the next couple of years, we’ll be repeating the recession in my home. The problem I find with entitlements is that the government has created arbitrary lines that afford some people with the incentive not to work and they’ll be rewarded more than those who are working. New American progressivism, modern liberalism, or post-FDR Democrats all have it in their heads that the collective is the way to go. There are millions above the poverty line s-o-l when it comes to entitlements but who nonetheless have a large chunk of their earnings sloughed away without any say in it to provide entitlements for others. Qualify “others” how you will, but on the first of the month at the checkout lines you’ll see this putting stock piles of food on the conveyors and charging it to the janitor, counselor, or retail employee behind them.

Frankly, I’ve come to the conclusion the Left, or the Vanguard Democrats, have no clue as to what is actually going on in cities or towns across the South and in urban centers. The Occupy Movement, which has fizzled out entirely, tried to enlist some anarchist or libertarian philosophy, but the liberals latched onto it, begging for their problems to be whisked away with bailouts as if the large labor force made up of the working poor wouldn’t be taxed with that charge.

Just because there are very wealthy people doesn’t mean there exists a valid reason to create entitlement programs for the poor. The false-hope created by those only helps some poor people for a short amount of time on the backs of the working man. It’s all transfer payments. If the top aren’t taxed and can pay to avoid it, who’ll foot the bill? The working.

Hi Dan. What you are saying, I think, is that the middle class and working people in this country are getting a rotten deal, paying more than their fair share of taxes and getting paid less for what they produce. I would definitely agree with you. I believe our Congress sees the middle class as its cash cow. If our middle class woke up to this, there would be a revolution.